China warming to TPP, bi-partisan NZ approach vital, says Groser

New Zealand risks an error of historic proportions if opposition to the Trans-Pacific Partnership sees the country left out of a trade deal that will almost certainly encompass China in due course, Trade Minister Tim Groser has told a China Business Summit in Auckland.

He also warned the New Zealand bureaucracy needs to lift its game to deepen the services it offers to support the burgeoning trade relationship with China and to improve Chinese language skills.

With Fonterra's whey protein concentrate botulism false alarm still fresh in the minds of both Chinese and New Zealanders, Groser stressed expressions of trust in both the New Zealand government and Fonterra during last week's APEC and East Asian Economic Summits in Indonesia.

However, unless there was cross-party support for engagement on trade liberalisation, it was likely New Zealand risked losing the platform it had built with China, which has included such unusual initiatives as the creation a free trade compact with Taiwan.

Referring carefully throughout his speech to Taiwan as Chinese Taipei, Groser said the tripling of growth with China since a Labour-led government signed the China free trade agreement in 2008 was in part based on years of engagement and strict application of a "one China policy", which accepts Taiwan will eventually become part of China again.

In an allusion to signs the Labour Party is less committed to its traditional bi-partisan support for free trade agreements, Groser said New Zealand was "clearly as well placed as any people on the planet to benefit from these huge geo-strategic shifts, provided as always, we make the right choices."

That was particularly important since opposition to globalisation was likely to intensify with the newly identified trend of "hyper-globalisation".

"In some political corners of New Zealand, the very word 'globalisation' evokes fear and anguish," said Groser. "God knows what 'hyperglobalisation' will do to their minds.

"But whether we call it globalisation or hyperglobalisation, it is not a disease that you catch, it is a choice that you make. Nor is it a choice that political parties can make and then delude themselves that settles it for New Zealanders. This is a world of unparalleled choice and opportunity, including the mobility no longer just of capital, but of labour and above all, ideas."

Groser suggested also there are "increasing signs ... that China is becoming increasingly positive towards TPP", the Trans-Pacific Partnership free trade negotiation, which current does not include China.

While it was "deeply improbable that any country will now join" the 12 TPP countries as they push to close a deal, he said. "But the whole point of TPP was to act as a building block for an entire Asia-Pacific zone of trade and economic integration. That, by definition, could not happen without the eventual involvement of China whether literally in TPP or some logical extension of it.

"And some people in NZ think we should opt out of TPP? It beggars belief, frankly," Groser said. "New Zealand must be part of TPP. To stay outside would be an historical mistake of immense strategic significance."

On the Fonterra botulism scare, Groser noted "the President of China used a very deliberate formulation in his discussions at the APEC Summit with Prime Minister Key. In English, it was translated as 'both Fonterra and the Government have adopted a positive and responsible approach'.

"We will not misinterpret this. We are perfectly well aware that there are important questions still in the minds of Chinese agencies, and no doubt in the minds of our customers. But it does give us every reason for confidence that we can work through these issues and resolve all outstanding matters."

Further announcements on responses to prevent future recurrences would be made soon.

However, there was also a consensus that the rapid expansion of trade with China has run ahead of "NZ Inc's capacity to service this exploding economic relationship."

Recent moves to increase Ministry of Primary Industries staff presence in China was a response to this, but that was just a start, said Groser.

"All Government agencies with responsibilities for providing the infrastructure behind our China operation need to be asking themselves issues that are finally not political issues within the control of their Ministers - have they got the long-term human resources strategies to keep up?

"I am certain the answer for many of them is 'no'. And I have made no secret of this both in private over the past few years and, more recently, in public."

Language acquisition was an important element.

"A purely 'transactional' approach to trade ain't going to cut it in the 21st Century. We need to nurture over the next 10 years or so a whole cohort of officials, not just in Ministry of Foreign Affairs and Trade and NZ Trade and Enterprise (who do understand this), but other agencies.

"And they need to be matched by a whole cohort of young business leaders in New Zealand companies who get this. We prospered between 1880 and 1970 in an Anglo-Saxon dominated world. This is a very different world we are entering."

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3 Comments & Questions

Great speech. It will be a total disaster for NZ if Labour moves away from current policy settings on trade policy. It might also be the end of Labour as we know it. I suspect that Shane, Phil and Annette will do something radical if this lurch to the far left happens.

We already have a traditional FTA with China, without all the extra nonsense TPP is trying to throw in such as Intellectual Property, investor-state dispute provisions and restrictive trade provisions like banning legitimate parallel imports.

So are we supposed to fall in love with the TPP because of the possibility of one day China might discuss joining? This sounds a bit silly.

Geo-politically China may be getting defensive because of the USA encroachment into Asia which China feels is it's back yard. I could totally see China expressing interest to join in attempt to slow up the process or cause the whole agreement to fall apart.

The sad thing about the whole agreement is it's been reported that the Obama administration are currently negotiating without authority to do so from Congress. If Congress and the White House can not agree a budget to run the USA is it realistic that the Obama Administration will every be given authority to negotiate a Trade Agreement without Congress reserving the right to review the contents line by line and make amendments? Not likely!

Is it a risk that New Zealand is negotiating in good faith with a party currently unauthorised to make the deal. After we concede what is necessary in the first round with the Obama Administration, what will we have to concede once Congress rips the TPP to bits to protect the hundred of speciality interest groups that will be negatively affected?

I dont want NZ to be a naval base and food basket for China and Russia. NZ is only justified as first world and richer than Argentina as long as Long as it serves the interests of the USA ,uk,fr,,gr,can,au and is prepared to fight for it at sea, air and land with an inteligent and aggressive euro maori military.